too this is the channel for you. Late at night on November 25th  

1870, two bedraggled looking men clutching  a leather sack knocked on the office door of  

San Francisco businessman George Roberts. They  explained to him that they had arrived in the  

city too late to put their parcel into the Bank of  California, and asked him if he would be willing  

to put their bag in his safe for the night. Well  of course that made Mr. Roberts wonder what was  

in the bag. The two men were tightened up but  George Roberts was a clever businessman and he  

was able to wheedle some information out of them  on the solemn promise that he would tell nobody  

else. Well, if the two men hoped that George  Roberts would keep their secret, they would be  

sorely disappointed. He was apparently contacting  friends almost the instant they left his office…  

because what was in the bag was simply too good a  business opportunity for a man like George Roberts  

to ignore. The bag was filled with uncut gems:  rubies, emeralds, sapphires, and lots and lots  

of diamonds. And the discovery of what was quite  apparently the richest gem field in the Americas  

is a story that deserves to be remembered. Philip Arnold hailed from Elizabethtown,  

Kentucky. He was poorly educated, he had been an  apprentice to become a Hatter when he decided to  

enlist in the army to serve in the war against  Mexico in 1845. After the war he become one of  

the hundreds of thousands of 49ers who had  come to California to strike it rich during  

the gold rush. He'd worked in mining operations  throughout the West, making enough money to buy a  

farm and start a family in his native Kentucky,  although he continued to work in the West and  

only returned home periodically. In 1870 are left  his job working for a company that manufactured  

drill bits for mining, and went to partner  with his cousin a man named John Slack who  

was also a veteran of the Mexican War and also  a 49er, and the two of them had worked together  

at a silver mine in New Mexico and they would  not to seek their fortune in diamonds and by  

November of that year the two prospectors had  managed to fill a bag with uncut diamonds and  

George Roberts the man upon whose door they  had knocked wanted a piece of the action. 

One of the first people that Roberts contacted  was William Chapman Ralston, one of the richest  

men in San Francisco and the founder of the Bank  of California, and Ralston contacted a colorful  

mining financier named Asbury Harpending, who have  been involved in mining in the West to manage the  

project. Before they knew it, the two backcountry  prospectors had some of the richest people in San  

Francisco asking to be their partners. Harpending  said of them, they had all the manner of a couple  

of simple-minded fellows who had stumbled upon  something great, and bewildered by their good  

fortune were simply afraid to trust anyone with  their momentous secret. But the promise of more  

money than they could ever imagine was too much  to pass up and they sold 50% of their stake.  

They were given in advance of $50,000 roughly the  equivalent of $900,000 today and told to go back  

to the mine and bring back more gems as proof of  its value. They returned in the summer of 1871  

with a burlap bag brimming with gemstones.  Harpending took the bag to a meeting of the  

ambassadors, dumping them on the table and what  he described as “a dazzling many colored cataract  

of light”. They sent 10% of the jewels to New  York to be appraised by the most knowledgeable  

jeweler in America, Charles Louis Tiffany the  world-famous founder of Tiffany & Company.  

According to Harpending, Tiffany's assessment  was, “Gentlemen these are beyond question  

precious stones of enormous value.” Eventually he  estimated the value of the gems just 10% of those  

that are Arnold and Slack had brought back that  summer and $150,000, making the whole bag worth  

a staggering 1.5 million dollars. The group  that recruited more investors notably George  

B McClellan who had been commander of the Army of  the Potomac during the Civil War and had once run  

for president, and Benjamin Franklin Butler, who  had been a Major General during the Civil War,  

and was now congressman who would be helpful the  investors considered in securing the land if the  

gem field turned out to be on federal property. Now more than ever, the wealthy group of investors  

wanted to buy out the two Kentucky miners  who had discovered the gems. They gave them  

another hundred fifty thousand dollars  on the promise that they would bring a  

bonafide mining inspector to inspect the claim,  Harpending engaged Henry Janin, of whom he said,  

as a great mind expert and consulting engineer,  he was without peer in the United States,  

perhaps in the world. In June of 1872 Janin and  Harpending traveled with Arnold and Slack by  

train from St. Louis to the tiny town of Rawlins  Wyoming. There they had a grueling four-day track  

to the site. What they found there amazed them.  They found a high mountain Mesa where diamonds  

could literally be discovered merely by kicking  the dirt. Harpending said, for more than an hour,  

diamonds were being found in profusion together  with occasional rubies, emeralds, and sapphires.  

Janin assured me that the discovery location alone  which we had partially examined was certainly  

worth many million dollars. The investors quickly  bought out Arnold and Slack, they received another  

$150,000 and then sold out some $300,000 in stock.  The total take was some six hundred fifty thousand  

dollars, nearly twelve million in 2018 dollars.  That was a tidy sum but nothing compared to the  

value of the gem field. The wiley bankers had  taken the claim from the miners who found it,  

for a steal. As Harpending noted, “thus the  decks were cleared”. But even they did not  

have a real appreciation of the value of their  claim that actually occurred by coincidence. 

Janin happened to run into a team of government  geologists, including Clarence King, on the train  

from Oakland. King was a Yale trained geologist  who was in charge of an immense federal mapping  

project called the 40th Parallel Survey. They  decided to visit the site in October of 1872.  

They, too, were amazed as raw gemstones were  easily found laying about. They were able to  

survey more thoroughly and even dug a 10-foot  beak trench where the greatest diamond deposit  

should be. What they found astounded them.  They rushed back to San Francisco to tell  

the new owners of their discovery. On November  11th 1872 they told the startled investors the  

amazing news they had about their famous gem  claim. It was...utterly...worthless. The gems  

had been scattered about salted and ordered to  fool investors, some of the wealthiest men in  

America had been taken to the cleaners by a  couple of backcountry rubes. Filiberto might  

not have had a lot of education but he was no  dummy. He hadn't stumbled upon George Roberts  

business by mistake. He knew exactly who George  Roberts was and exactly to whom he was connected,  

and he knew the best way to get George Roberts  to sink the hook on their con was to get him to  

"solemnly promise" not to tell anybody else. They've gotten the diamonds to bait the con  

from Arnold's former employer. He worked for  a company that made drill bits, diamond drill  

bits. Diamond drills used chips of low quality  industrial grade diamonds, and he had stolen the  

raw diamonds from there. He and his cousin had  then added raw gems: opals, emeralds, rubies,  

and sapphires they'd bought from Native Americans  when they had been miners in New Mexico. When they  

got that first $50,000 advance they hadn't gone  back to to mine diamonds, they hop a ship for  

London and under assumed names bought thousands  of low quality, uncut diamonds on the market  

for just $20,000 and then Charles Tiffany valued  just a tenth of those to be worth over $150,000.  

They use some of their next advance to purchase  more stones to salt about a half acre of ground  

in far northeastern Colorado near a low mountain  still called, Diamond Peak, and those had fooled 

their investors. But how did they do it? How  had they fooled a respected mining engineer,  

and the most knowledgeable jeweler on the  continent? It turns out Charles Tiffany and his  

lapidary actually had almost no experience with  uncut stones as stones were almost exclusively  

cut in Europe and had appraised them as if they  were for higher quality than they really were and  

Henry Janin assured by Tiffany's valuation didn't  even consider fraud, in addition the mine engineer  

had been promised an option to buy a thousand  shares of company stock shares that would have  

been worthless had the mine been fake the thought  does not seem to have even crossed his mind. All  

the experts' confidence reinforced each other. Philip Arnold moved back to Kentucky  

where he bought 500 acres of land that he put  in his wife's name. The two were indicted for  

fraud by a grand jury, but the investors were  too embarrassed to pursue criminal charges.  

Arnold denied that he had salted the claim but he  did end up settling with one of the investors for  

$150,000, but that means he still came out far  ahead on the deal. He died of pneumonia in 1878. 

John Slack seemed to disappear, but a 1967 book  on the Great Diamond Hoax asserted that he became  

an undertaker and died in New Mexico in 1896.  Thats unproven, but if it's true it raises an  

interesting question because the man who died  in 1896 only left his family about $1,000 and  

that means what happened to the rest of the  money that he made in the Great Diamond Scam.  

To understand why this could happen so easily you  do have to understand the period. These investors  

had made millions of dollars on the California  Gold Rush, they had great faith that the mineral  

values of the western United States could bring  untold wealth, they had seen it happen. It was  

all too easy to believe. Far too easy, it seems,  because emeralds sapphires and rubies had nowhere  

else in the world been found alongside diamonds.  According to Harpending, "that fact ought to  

have made a goat do some responsible thinking." Of course the hero of the story is Clarence King,  

the Yale trained government geologist. He became  famous for his role in covering the Great Diamond  

Hoax and was one of the great geologists in American history. His survey mapped  

an extensive part of the West between the  Rocky Mountains in the Sierras. He authored  

several famous books and three mountains  are named after him. In 1879 when Congress  

consolidated all the national surveys and  created the United States Geological Survey,  

he was named as its first director. He died  of tuberculosis in 1901 at the age of 59. 

It's hard to figure out what lesson to take from  the Great Diamond Hoax of 1872. There is some  

delicious irony in two Kentucky rubes fooling  some of the most prominent men of the day,  

but crime pays is never a good lesson to  take. Maybe the best lesson is that science  

wins in the end. In any case, it is a ripping  yarn, history that deserves to be remembered. 

I'm the History Guy and I hope you enjoyed this  edition of my series, 5 minutes of history,  

short snippets of forgotten history five to ten  miles long. And if you did enjoy them please go  

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